In Q2 America Added $2.33 In Debt For Every $1.00 In GDP

As noted before, courtesy of the GDP revision, all the kneejerk reactions in the past 3 years to various GDP headlines (preliminary, first and final revisions at that), were all for nothing. In fact, today's GDP number will be revised and re-revised in the next two months, then re-re-re-revised at the annual revisions in 2013, 2014 and 2015. In other words, the number after (and likely before) the decimal comma is irrelevant. One thing however stands, and that is the trendline change in actual GDP compared to the change in debt used to "buy" said GDP. Which is why we present our favorite chart showing how much more total federal debt was added per quarter over the GDP. Bottom line: in Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP (from the revised data: Q1 GDP of $15,478 billion rising to just $15,595 billion in Q2). Probably what is more indicative, is that in Q2 the delta change between debt and GDP rose from 2.28x in Q1. But that too is largely noise and will be revised. What won't be revised is that over the past two years, the US has added 2.42x more debt than it has added GDP.

Another way of visualizing the above courtesy of two trendlines- that of US debt and of GDP:

And that is all that matters (and all who say corporations benefit from the relevering of the sovereign host due to some wrong equation they learned in Econ 101 may want to take a long hard look at Q2 corporate revenues and then explain why it has just printed the first year over year decline since the Lehman collapse).

Normally ponzi schemes collapse sooner because the investors run. There is no where left to run in the global fiat ponzi, and the paper will eventually be worthless anyways... So just keep piling on and kicking the can, giving more rats time to abandon ship.

I completely agree. The criminals behind the Euro are just buying time while they work on implementing plan G. Enough sheeple will still fight to keep the old euro together. You can easily change euro for us$ or Fed Reserve or blah blah blah.

It's not a new Ponzi they wish to start. It is the total destruction and shaming of the "capitalist" system as the cause of all the worlds ills. It's the greedy banksters, the hoarders, those that don't pay their fair share. The blsme is being laid so that the sheeple accept the new reality. That reality will be one where those very smart and very caring people take care of us and provide for everyones needs. We will give them all the powers they need to accomplish this as we will be so afraid we will have to.

Or at least that's how I see their strategy. Not saying it will work, just that it seems to be the plan.

Krugman's theory is only correct if we are talking about one individual or entity (e.g. borrowing money from yourself and issuing an IOU or intercompany borrowing). More than one single party and the argument is lost. I'm guessing that future Social Security recipients would be mildly peturbed if the U.S. Treasury stiffed holders of inter-governmental debt because it's "money we owe ourselves".

This answers the question, "Why are you so skeptical of the recovery," or "Why are you so bearish about the future?" Well, because we've borrowed from the future to party today. Tomorrow, when it gets here, is going to be a bitch.

That misses the real problem - this monetary regime can continue for a long time further and within that system, we will have much slower growth and a lowered standard of living. Easy money has faciliatated good times and now that punchbowl is being taken away.